HSBC Holdings Plc, Europe’s biggest bank, posted a 57 percent drop in first-half profit after setting aside US$13.9 billion to cover souring consumer loans.
Net income declined to US$3.35 billion from US$7.72 billion a year earlier, the London-based company said in a statement yesterday. That beat the US$600 million median loss estimated by seven analysts surveyed by Bloomberg.
HSBC’s takeover of subprime lender Household International Inc in 2003 contributed to the US$53 billion in provisions the bank has reported in the past three years. Hurt by soaring US bad debts, HSBC decided in March to halt consumer lending at the operation and may review the bank’s credit-card unit in the event that the US economy deteriorates. The bank also raised US$17.8 billion in an April rights offer to shore up capital.
“We expect 2009 to be the peak year of loan losses,” Michael Chang, a Hong Kong-based analyst at Deutsche Bank AG who has a “hold rating” on the stock, wrote in note to clients before the results were published. “The rate of improvement from here is naturally pivotal to near-term earnings valuations of the stock.”
HSBC rose 1.6 percent to 605.75 pence in London trading on July 31, valuing the bank at about £104.9 billion (US$176 billion). The stock has climbed 5 percent in London trading this year. In the same period, shares of London-based Barclays Plc doubled and the 63-member Bloomberg Europe 500 Banks Index advanced 32 percent.
“The timing, shape and scale of any recovery in the wider economy remains highly uncertain,” chairman Stephen Green said in the statement. “Our view continues to be cautious.”
Green said in March that HSBC regretted the decision to buy Household International, now called HSBC Finance.
“It’s an acquisition we wish we hadn’t done with the benefit of hindsight, and there are lessons to be learned,” Green told reporters during a March 2 conference call.
HSBC’s writedowns and credit-market losses are already more than twice those of Credit Suisse Group AG and Barclays Plc, according to data compiled by Bloomberg. HSBC’s US$42.2 billion since the third quarter of 2007 compares with US$20.1 billion at Barclays and US$18.9 billion for Credit Suisse.
Loan loss provisions may not peak for HSBC until next year, though the bank “is arguably the only genuine global bank, which, combined with a funding advantage, means that it is ideally placed to leverage a recovery whenever this happens,” Anil Agarwal, a Hong Kong-based analyst at Morgan Stanley, wrote in a July 17 note to investors.
Unlike RBS and Lloyds Banking Group, HSBC avoided turning to the government for a bailout during the credit crisis.
FALLING BEHIND: Samsung shares have declined more than 20 percent this year, as the world’s largest chipmaker struggles in key markets and plays catch-up to rival SK Hynix Samsung Electronics Co is laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce its global headcount by thousands of jobs, sources familiar with the situation said. The layoffs could affect about 10 percent of its workforces in those markets, although the numbers for each subsidiary might vary, said one of the sources, who asked not to be named because the matter is private. Job cuts are planned for other overseas subsidiaries and could reach 10 percent in certain markets, the source said. The South Korean company has about 147,000 in staff overseas, more than half
Taipei is today suspending its US$2.5 trillion stock market as Super Typhoon Krathon approaches Taiwan with strong winds and heavy rain. The nation is not conducting securities, currency or fixed-income trading, statements from its stock and currency exchanges said. Yesterday, schools and offices were closed in several cities and counties in southern and eastern Taiwan, including in the key industrial port city of Kaohsiung. Taiwan, which started canceling flights, ship sailings and some train services earlier this week, has wind and rain advisories in place for much of the island. It regularly experiences typhoons, and in July shut offices and schools as
An Indian factory producing iPhone components resumed work yesterday after a fire that halted production — the third blaze to disrupt Apple Inc’s local supply chain since the start of last year. Local industrial behemoth Tata Group’s plant in Tamil Nadu, which was shut down by the unexplained fire on Saturday, is a key linchpin of Apple’s nascent supply chain in the country. A spokesperson for subsidiary Tata Electronics Pvt yesterday said that the company would restart work in “many areas of the facility today.” “We’ve been working diligently since Saturday to support our team and to identify the cause of the fire,”
TECH PARTNERSHIP: The deal with Arizona-based Amkor would provide TSMC with advanced packing and test capacities, a requirement to serve US customers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is collaborating with Amkor Technology Inc to provide local advanced packaging and test capacities in Arizona to address customer requirements for geographical flexibility in chip manufacturing. As part of the agreement, TSMC, the world’s biggest contract chipmaker, would contract turnkey advanced packaging and test services from Amkor at their planned facility in Peoria, Arizona, a joint statement released yesterday said. TSMC would leverage these services to support its customers, particularly those using TSMC’s advanced wafer fabrication facilities in Phoenix, Arizona, it said. The companies would jointly define the specific packaging technologies, such as TSMC’s Integrated